Market Analysis: US Telecommunications Services 2014-2018 Forecast

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Market Analysis

U.S. Telecommunications Services 2014–2018 Forecast
Amy Lind

Courtney Munroe

Businesses and consumers continue to utilize an ever-expanding number of bandwidth-intensive applications and to demand faster connections to the Internet and to corporate sites, further driving the demand for bandwidth. As a result, the telecommunications services market experienced positive growth in 2013, with wireline and wireless services generating $346.8 billion in revenue at year-end.
However, the wireline segment is under considerable pressure from wireless technologies and services (particularly mobile data services), which will drive mobile revenue gains through 2018. IDC finds the following:
The revenue outlook for telecommunications services will remain stable but flat, with a fiveyear compound annual growth rate (CAGR) of 1.2%. In 2013, wireline and wireless services revenue totaled $346.8 billion. Year-over-year growth rates will remain positive but decline modestly throughout 2018 — when the market peaks at $368 billion in revenue.
Wireless services revenue surpassed revenue generated by landline services in 2009 and has continued to gain share at wireline's expense since then. By 2018, wireless services will generate $237.3 billion in revenue and account for 64.5% of the total telecom services market in the United States.
Data services are the growth engine of the wireline services market. In 2013, wireline data services accounted for 53% of total wireline services revenue, and by 2018, it will account for
62% of total wireline services revenue. In contrast, wireline voice services revenue is in steady decline as healthy growth of VoIP services will not be enough to offset continued contraction of legacy voice services.
Both the residential and enterprise landline markets are contracting at low single-digit rates.
The residential wireline market is declining at a CAGR of -0.1%, while the business wireline market is declining at a CAGR of -1.4%. Data services — specifically IP services such as broadband, IP VPN connectivity, and Ethernet-based service offerings — are driving growth in both the residential and enterprise segments; however, business data services growth will be slower than residential data growth.

May 2014, IDC #248668

This IDC study analyzes the U.S. telecommunications services market. In addition to discussing key trends, the study compares wireline and wireless revenue projections, forecasts voice and data wireline services revenue, and segments wireline services revenue by residential and business customers. Methodology
This study reflects IDC's ongoing research on the U.S. telecommunications services market. The analysis and forecasts are based on public and proprietary information including financial reports, statistics from governmental organizations, insights derived from IDC's consulting engagements, historical growth, and interviews with service providers, equipment manufacturers, and other participants in the communications services market. It also draws from discussions with end users and incorporates results from IDC's numerous telecom-related surveys. This study segments the telecom services market as follows:
Voice services include:
Local, long distance, and value-added voice features
Data services include:
Internet/broadband access
Frame relay and ATM
Private line
Ethernet connectivity
The forecasts exclude professional services, managed services, Web hosting, and cloud-based services. Note: All numbers in this document may not be exact due to rounding.

The U.S. telecommunications services market has undergone significant changes in the past decade, driven by intensified competition as communications service providers struggle to gain or maintain market share in an increasingly competitive market. New technologies and services are replacing entrenched legacy solutions and end users are dramatically changing their